Latin America has historically faced difficulties in growing and developing sustainably. The clear differences that exist between Latin America and the rest of the world in terms of political thought are also reflected in the economic differences. Likewise, at almost any moment we can find the regimes most closely associated with communism or capitalism, as well as the most authoritarian or most liberal governments, and, most interestingly, with some exceptions, they are not always the same in time. Despite the above, I see three aspects that distinguish our region, in addition to the language from Latin and a passion for football: (1) very high levels of inequality and a lack of opportunities for greater social mobility; (2) legal uncertainty and rule of law enforcement; NS (3) The ability of politicians to persuade entire populations to implement simple “solutions” to the most symbolic problems, based on the application of extreme economic and political systems.
Unfortunately, Latin America is the least developed region before the pandemic and hardest hit by the economic impact of movement restrictions and social distancing caused by the Covid-19 pandemic. On the one hand, the GDP of Latin America recorded zero growth in 2019, while the economy of China, for example, grew by 6.1 percent, and the economy of Sub-Saharan Africa recorded a growth of 3.2 percent, compared to the United States. 2.2 percent, the euro area 1.3 percent, and the Middle East and Central Asia 1.4 percent. Similarly, in 2020, Latin America’s GDP suffered a 7.0 percent collapse, while the Eurozone economy fell by 6.6 percent, the United States’ economy declined by 3.5 percent, and the Middle East and Central Asia’s GDP recorded a 2.9 percent decline. cent. , in sub-Saharan Africa – 1.9 percent, and in China – 2.3 percent. In light of the latest forecasts of various multilateral organizations, Latin America will not be one of the regions that will grow more in 2021, especially compared to the significant decline in 2021. Latin America’s GDP is very likely to grow around 4.5 percent, lower than China’s. And the United States is closer than the countries of the eurozone, the Middle East and Central Asia will grow.
In addition to a host of structural problems facing Latin American economies, there are political issues. In this sense, since in Mexico we do not observe the pre-election problem, nor do we observe the post-election problem, I will leave it and focus on those who live in the sister countries of South America. With the exception of Ecuador, which took a 180-degree turn in the economic and political system with Guillermo Lasso’s victory, most large Latin American countries face problems either before elections – such as Colombia, Chile and Brazil – or after elections, such as Argentina and Brazil. Peru. The inhabitants of these countries never seem to be satisfied, as is the case in many countries. However, the big difference was noted in vacillating around the ideas promoted by the politicians who elect them.
Colombia recorded strong street protests over the tax reform proposal submitted by the government of President Ivan Duque, which led to the resignation of the Treasury Secretary and the withdrawal of the said proposal. This resulted in Colombia losing its “investment grade” in its sovereign debt ratings. Similarly, it is Gustavo Petro, a far-left candidate, who leads the polls for the presidential election in May 2022. For his part, after violent protests in 2019, Chile has just elected a Constituent Congress, which will be responsible for drafting the new constitution and both the moderate left and the left have won The extremist has more than half the seats. They are also heading to presidential and parliamentary elections scheduled for November 21 this year. In Brazil, President Bolsonaro may face impeachment charges for corruption and mishandling of the Covid-19 pandemic. The next presidential and parliamentary elections will be held in October 2022, with the general opinion that the candidate to win will be former President Lula da Silva or the candidate of his choice. On the other hand, those with post-election problems are Peru and Argentina. Peru has just elected Pedro Castillo, the far-left candidate, who will take office tomorrow. There is tension among participants in international financial markets over what kind of economic policies Castillo will implement. Finally, similar to the recurring crises of the 1980s and 1990s in Latin America, Argentina faces a very difficult macroeconomic situation. The Argentine peso has depreciated by about 400 percent from 2018 so far, citizens are facing an annual inflation rate of more than 50 percent, and the economic revitalization after the pandemic is one of the least dynamic activities on the continent. And so, once again, Latin America will be the region with the least growth in the world this year, when it will be one of the regions that can and needs the most growth, given its large needs in terms of levels of poverty and inequality.
*The author is Deputy Director General for Economic Analysis, Investor Relations and Sustainability at Grupo Financiero Banorte, Chair of the National Commission for Economic Studies at IMEF and member of the Dating Commission for Mexican Economics Courses.
* The opinions expressed in this column are personal.
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